What happened
Actions of GW Pharmaceuticals (NASDAQ: GWPH) were firing 46.3% as of 10:45 EST on Wednesday. The big gain came later Jazz Pharmaceuticals (NASDAQ: JAZZ) announced plans to acquire GW for $ 7.2 billion.
And
It is certainly no surprise that GW Pharmaceuticals’ stock soared today. Jazz’s offer of $ 220 per share by GW represents a 50% premium on the closing price of biotech stocks focusing on cannabinoids on Tuesday.
Image source: Getty Images.
Although the overall price of the deal is US $ 7.2 billion, the real value that Jazz will spend is less than that. Without GW’s cash, the transaction value is pegged at $ 6.7 billion. Jazz offered $ 200 in cash plus $ 20 in shares for each American depositary share (ADS) of GW.
Why did Jazz choose to buy GW? Jazz Pharmaceuticals CEO Bruce Cozadd said that GW’s cannabinoid platform and pipeline “will strengthen and expand our neuroscience portfolio, further diversify our revenue and lead to sustainable long-term value creation opportunities.”
The crown jewel of GW Pharmaceuticals is Epidiolex. It was the first plant-derived cannabis drug approved by the US Food and Drug Administration (FDA). The first FDA approvals for Epidiolex were for Dravet’s syndrome and Lennox-Gastaut syndrome. Subsequently, he obtained FDA approval for the tuberous sclerosis complex. All three are rare diseases associated with early-onset epilepsy.
Jazz expects the transaction to accelerate his revenue growth. He also expects the acquisition of GW to be an addition to profits in the first full year of combined operations.
What now
It is not yet a closed deal. The boards of directors of both companies unanimously approved the acquisition. However, GW shareholders must also vote in favor of the purchase. In addition, Jazz and GW will have to obtain regulatory approvals. However, companies expect the transaction to be completed in the second quarter of 2021.